Conflict diamond issue could still harm industry, says De Beers

The conflict diamond issue still poses a grave danger to the industry, Rory More O’Ferrall, De Beers director for public and corporate affairs, told sightholders recently.

“It is easy to say that [the Kimberley scheme] won’t work,” he continued. “It is easy to say that the international community has been unable to regulate drugs or the arms trade, that people determined on illegal activities will always find a way to circumvent the rules, that corrupt governments or officials will render the scheme inoperable. It is easy to say that the very conflicts that the scheme was designed to halt appear-at least for the present-to be over, so why should we bother? Why should the diamond industry be singled out so unfairly in this way and all of us be penalized for the activities of a few rogue traders and the failures of the UN and governments in conflict resolution?”

But those arguments miss the urgent reality of the situation, he argued.

“There was a real threat to the diamond industry, to our companies, to our livelihoods,” he said. “Unless swift and firm action was taken to drive conflict diamonds out of the mainstream of our business, the consumers in our main markets would boycott diamond jewelry-with the same effect as the negative public reaction to fur had in destroying that trade. This was a real danger. It is still a real danger.”

“The leaders of the industry saw that there was a clear moral imperative that we could not allow our beautiful and unique product to be associated in any way with the horrors of war,” he continued. “We could not stand aside and say this was an African problem, let Africa solve it. A very large proportion of our rough diamonds-the diamonds you buy here at the Sights, [that] are traded and polished downstream and made into jewelry-come from Africa. Whether we like it or not, we were involved, we are involved. Equally, the commercial imperative was clear: Do nothing and our entire industry was at risk. The leaders of the industry chose, wisely, to act.”

He admitted that the system was not perfect, but was the best possible deal for the industry: “[The industry could have] faced far more stringent and intrusive controls, regulations and inspections would have been imposed upon us by the United Nations and by our own governments.”

But the new system has been designed so it is easy for the industry to comply with, O’Ferrall noted.

“For most of us, it amounts to no more than ensuring that the rough and polished we buy is accompanied by a signed warranty from the vendor that the diamonds being offered for sale are conflict free,” he said. “When we sell rough or polished, we must issue a signed warranty that the diamonds being offered for sale are conflict free. When required to do so by the relevant government authority, our auditors will verify that warranties have been obtained on purchase and issued at sale, and that a record of this has been kept. What could be more simple? For importers and exporters of rough (not polished or diamond jewellery) there is the added requirement that the goods be accompanied by an import or export certificate issued by the relevant national authority. This is really not much to do to protect ourselves, the reputation of our industry, and the integrity of our product.”

He added that the industry’s collaboration with governments and NGOs has greatly improved its standing in the world’s eyes.

He concluded by noting the Kimberley Process is still needed, even though many of the wars in the conflict-diamond countries are over.

“There is still a civil war and appalling human suffering in the Democratic Republic of Congo, and although there seems to be a real chance for peace in Angola, the situation in Sierra Leone remains uncertain,” he said. “The sad reality is that further conflicts in Africa, or elsewhere on our troubled planet, are probably inevitable. Our industry has to be insulated from any taint of conflict in the future. The Kimberley Process provides that insulation … We will, through the international certification scheme and the System of Warranties, be able to reassure our ultimate customer, the all-important consumer, that our product-the natural diamond-is and will remain the ultimate symbol of beauty, love, and eternity. The ability to do this with confidence will be of real commercial benefit to our business.”

But the industry will continue to face scrutiny, he added, noting that more people are looking at the issue of whether terrorists store money in diamonds.

“We may say, with near certainty and justifiable outrage, that no evidence of this whatsoever has been produced by the government intelligence agencies, but that is not the point,” he said. “In the post-September 11th world, the very fact that diamonds-amongst many other commodities-could be misused in this way is enough to ensure that governments insist on a better-regulated industry. The Kimberley Process is no longer just a conflict issue, it is an urgent international security issue. In the case of the United States, our largest consumer market, this is a national security priority.”